The importance of a well prepared, accurate budget is grossly overlooked. The average American saves about 0% of his or her income- pointing toward the seemingly obvious conclusion that the proper handling and planning of finances is something largely absent from our culture. Even if the task of creating and maintaining a budget seems tedious and annoying, the benefits far outweigh the inconvenience. Budgeting can help reduce stress by neatly allocating all available funds into proper categories so you always know what is available to spend. Budgeting can reduce friction between all those personally invested in the available money (namely, your spouse), and it can also save you money in the long run by helping you avoid overdrawing from your account, overdraft charges, spending money you don’t have, or running out of money before you next pay check arrives (reducing the chance of bills piling up or gaining interest). Check out the budgeting tips below to help get you started.
Easy Budgeting Tip #1 – Write it All Down
Put your budget on paper! Write out all your monthly expenses (food, rent, mortgage payment, utilities, etc.) and then put down the appropriate amount of money that you normally spend on each item next to it on the list. Then write down your monthly income. Subtract the total expenses from the total income, and plan to put the surplus (if there is any) in a savings or emergency account. Having your budget down on paper (instead of just in your mind) will help keep you on track. It’s also the best way to communicate with anyone else involved in the financial planning process.
Easy Budgeting Tip #2 – Microsoft Excel
If you really don’t like the idea of writing your budget down, you could easily find a computer program such as Microsoft Excel to use as your budgeting template. Using a computer program can also make it easier to adjust and edit your monthly budget- and you can also keep a record of monthly purchases and spending this way.
Easy Budgeting Tip #3 – Use Cash
A debit card directly wired to your checking account is a wonderful thing. It’s easy and convenient. It’s simpler to carry, and more time efficient for paying. But many people find that paying with a debit card can lead to excess or unplanned spending. If you have this problem, you might want to seriously consider switching to a cash-centered spending routine. If your budget for the groceries this month is $100, and you go to the store planning to spend half of that, only take $50 cash with you and keep track as you shop so you don’t go over. If you are void of the convenient “cushion” your debit card provides, you are much more likely to stick to your intended spending limit. Try putting cash in envelopes to keep the money organized. Put all your food money for the month in one envelope, your bill money in another, your rent money it yet another, and so on.
Easy Budgeting Tip #4 – MoneyStrands.com
MoneyStrands.com is an online budgeting tool that is entirely free. It’s interactive and can help you keep meticulous track of all your income and spending. Plus, it’s kind of fun. Add your bank accounts and “cash account” and then set monthly spending goals in every category you need. The software will keep track of when you spend money in a certain area and add it up for you. You will easily be able to track how much you’re spending, and you will know when you’ve spent to your limit. There are also plenty of other cool features to help give you new perspectives on your spending and budgeting. It’s an awesome tool, and completely free- so I would encourage you to check it out. There are many other similar programs available online, if you want to do a little research to find them.
By using these tips and a little dedication, you will be well on your way to a budget perfect for your lifestyle. Keeping track of your money and setting limits for yourself will pay off in the end and reduce a lot of stress and confusion.